damn i feel so high when saying these… so far i have only seen 2 questions on them… WAC!!! WAM!!
weighted average coupon rate weighted average maturity by the way, WAM seems really important…easily could trick people…when calculating CPR based on the number of months the MBS is seasoned by, normally it’s given but they could just say it was a 30 pool then later mention WAM of 350… therefore, you use the 10 months * 0.2% to find CPR then times that by the PSA factor… to then find SMM I hope to hell this SMM stuff is on the exam…
Dude SMM is cake. Prepayment = (Outstanding mortgage balance - scheduled principal)*SMM If they give you CPR then SMM = 1-((1-CPR)^1/12) All you need to know.
i don’t imagine they would give us CPR…that’s the only real challenge to get you confused…but true, I hope this is on the exam haha maybe even a whole vignette with the same question over and over and over again…
i agree, i think they might just not give you the CPR, and make you calculate it from SMM then ask you either which month it is in (or is that too tough?) OR make you calculate the PSA, just like 1 of the questions in the sample exams.